Nurtured by Super-Angel VCs

Thursday, September 17th, 2009

Intuit recently acquired Mint.com for $170 million, but Mint never would have made it that far without being nurtured by super-angel VCs:

Mint.com owes much of its success to one such investor, First Round Capital, which opted to back the fledgling company at a time when other VCs demurred. Indeed, the Mint.com acquisition is First Round Capital’s largest exit, beating out the $100 million sale of portfolio company Powerset to Microsoft. And although First Round Capital would not quantify the return on its investment, co-founder Josh Kopelman says the Mint.com deal generated the highest return of any deal the firm has done. Previously its best return came when eBay acquired StumbleUpon for $75 million, which generated more than 14 times First Round Capital’s original investment. “I don’t think this changes our strategy,” Kopelman says. “It is continued validation for our approach.”

When First Round Capital made its initial investment in 2006, Patzer was a 25-year-old software engineer working for an electronic design automation company. But the Duke- and Princeton-educated entrepreneur envisioned building a Web site that would help consumers manage their money—one much easier to use than Quicken, the market-leading product from Intuit. “Quicken is not quick,” Patzer recalls saying to himself at the time. “There’s got to be a better way to do this.”

After spending 14 hours a day for six months building an early version of Mint out of his own savings, Patzer began looking for money to take the company to the next level. He was turned down by a dozen angel investors and many top established venture capital firms, including Sequoia Capital, Greylock Partners, and Clearstone Ventures. “Every single VC told me I would fail because no one would trust a startup with their financial info,” Patzer says.

First Round Capital saw something other investors missed. At a networking event for entrepreneurs in the summer of 2006, Patzer pitched Kopelman, piquing his interest. “I had a server running on a laptop in the trunk of my car,” Patzer says. “He waited a couple of minutes. I ran out and got the laptop and fired up a demo.”

Kopelman liked what he saw. He asked Patzer to send him a business plan. “We saw a really big market and someone who had really thought it out,” Kopelman says. “He saw an opportunity to solve a really big pain point for customers.” Within 10 days, First Round Capital offered to invest in the startup. “They moved incredibly fast,” Patzer says. “First Round Capital put down a term sheet without caring what anyone else would do.”

First Round Capital didn’t stop helping the company there:

Guidance from First Round Capital also helped Mint.com avoid several potential disasters. After Mint.com won the top award at the TechCrunch 40 conference in 2007, its Web site was besieged by users. The company’s servers went down, hampering its ability to capitalize on the coveted distinction. The Mint.com team traced the crash to a problem in its database technology. Later that night, Kopelman personally contacted an executive of MySQL, Mint.com’s database provider, asking him to help solve the problem. “We were able to resolve the issue within 24 hours—if not faster—because of the connections Josh had,” Patzer says. “It was a crucial moment.” Thanks to that save, Mint.com met its initial three-month goal for user acquisition in 36 hours.

A One-Way Ticket to Mars

Thursday, September 17th, 2009

Existing plans to travel to Mars are absurdly expensive and will remain unrealistic for decades, Paul Davies says, but there is a way to put humans on Mars at a fraction of the cost using foreseeable technology:

Five years ago I made the radical proposal that a handful of astronauts be sent on a one-way journey to Mars. I am not talking about a suicide mission. With its protective atmosphere, accessible water and carbon dioxide, and significant amounts of methane, Mars is one of the few places in the solar system that could support a human colony.

By eliminating the need to transport heavy fuel and equipment for the return journey, costs could be slashed by 80% or more. Supplies and a power source would be sent on ahead, and only when everything is functional would astronauts be dispatched. The base would be re-supplied from Earth every two years. Of course the mission would still be highly risky, but so is round-the-world ballooning and mountaineering. The ideal astronauts would be scientists and engineers who could continue to do world-class science while serving as trailblazers for the colonisation of a new planet. Eventually, more people would join them. After a century or two, the colony could become self-sustaining.

The first Martians would have to accept reduced life expectancy due to radiation, lack of advanced medical resources and lower gravity, but a return journey entails similar hazards. Moreover, the most dangerous parts of space exploration are take-off and landing: cutting out the return halves the risk.

I have presented my idea at Nasa conferences, and discussed it with scientists in other countries. The response has nearly always been positive. There is a persistent myth that nobody would volunteer to go. In fact, I have found no shortage of eager scientists, young and old, who say they would accept a one-way ticket.

How a software engineer tried to save his sister and invented a breakthrough medical device

Thursday, September 17th, 2009

Robert Goldman sold some intellectual property to an IP licensing company, and he made enough money that he didn’t need to work anymore. Then his sister got cancer, and he devoted himself to finding a cure:

  • I wanted to help my sister as much as I could. I went to Medline, where there are hundreds of thousands of documents describing clinical studies, to see what I could find.
  • There are billions of dollars spent every year on clinical studies. I was surprised to discover that there were sometimes clinical studies of treatments for which there were no clinical applications. The trials would show successful results but no clinical applications.
  • I found a 1987 Italian funded set of clinical studies that showed successful treatment of tumors by the application of chemotherapy directly into the tumors. But I could find nothing since then.
  • Tumors develop a feeder vessel that provides them with blood. I came up with an idea that if you could make a catheter small enough, you could thread it through a patient’s blood vessels and directly into the tumor’s feeder. You would then be able to direct chemotherapy straight into the tumor.
  • I decided to design and make the device. I founded Vascular Designs in 2001.
  • Medical device startup companies generally take a lot of money, around $25 million is a fairly typical first round capital requirement.
  • I had absolutely no idea what I was doing, or what it would take. But I wanted to make sure I wasn’t completely delusional. I thought I would start at Stanford and met with Dr. Michael Dake, professor of cardiothoracic surgery at Stanford University School of Medicine. He told that me if I could produce the device it might very well work.
  • But there were many people who told me it couldn’t be done, or that the materials wouldn’t work, or that I would never get it through the FDA process. I would ask them if this is because they had done the research? They said no, they hadn’t, but it wouldn’t work anyway.
  • I ignored their advice. I was determined to go ahead with it because I wanted to help my sister as much as possible, even though I had absolutely no idea what I was doing.
  • I managed to outsource a lot of the work. I found a company in Santa Cruz, through the Internet, that could help me with the design.
  • The first catheter we produced we were told it was too big. There was no easy way to scale it down. We had to start again.
  • It took us two years to do the engineering. And it has taken the FDA seven years and two months to approve the product for sale. We were able to shorten the FDA process a little by saying that it was similar to other devices that had already been approved.
  • Because the FDA is so strict it will be very easy to get approval in other countries.
  • We are now just 2 months away from using it in cancer treatments.
  • It cost just $1.8 million to develop. I did raise some funding only because some good people I knew wanted to be a part of this and this was how they could participate. They will make a lot of money from this, which is good because they can put it towards the development of other life saving products.
  • I’m hoping that if people read about this device they will bring it to the attention of their doctors despite some medical practitioners not believing that it can be done. When you have terminal cancer and you have exhausted all other treatments why wouldn’t you want to try this?
  • There was no prior intellectual property around this device, we own the IP. The market for this runs into the billions of dollars.
  • I’m not interested in the money, I already have enough money. I just want to help people. We want to make sure that this is available to people who can’t afford the treatment. Why should this be only for the rich?
  • It’s too late for my sister. She died and suffered terribly. I can’t wait to meet the first person and their family that will benefit from this. I’ve found my agenda in life and it’s about helping people.

Norman Borlaug

Wednesday, September 16th, 2009

Norman Borlaug, the father of the Green Revolution, passed away a few days ago at the age of 95. His improved agricultural production methods arguable saved hundreds of millions of lives — but the little Malthusian voice in my head keeps whispering that we’ll need a constant string of Borlaugs and a constrant string of Green Revolutions, or we’ll be saving millions only to see billions die of starvation at some point in the future.

Astro Boy Gets the Hollywood-Blockbuster Treatment

Wednesday, September 16th, 2009

Hollywood always claims that its latest adaptation will be faithful to the original, and it’s almost always an outright lie. Now Astro Boy gets the Hollywood-blockbuster treatment — and Hollywood’s hoping it doesn’t end up like Speed Racer:

For starters, it’s not live-action; it’s CG produced by Imagi Studios, Hong Kong’s version of Pixar. The company’s founder, Francis Kao, not only secured the movie rights but also hired the son of Astro Boy creator (and god of manga) Osamu Tezuka as a creative consultant.

“I was encouraged to expand on the universe,” says the flick’s director, David Bowers. “But at its core the movie is still faithful to the original.” Case in point: Our favorite rocket tyke sports a windbreaker and slacks (good-bye red undies and go-go boots), but his original powers (x-ray vision and turbo butt) remain unchanged.

Extinct New Zealand eagle may have eaten humans

Wednesday, September 16th, 2009

Haast’s eagle, a 40-pound bird that lived in New Zealand until 500 years ago, was a predator and not simply a scavenger, according to Ken Ashwell of the University of New South Wales in Australia and Paul Scofield of the Canterbury Museum — and Maori folklore:

Using computed axial tomography, or CAT, the researchers scanned several skulls, a pelvis and a beak in an effort to reconstruct the size of the bird’s brain, eyes, ears and spinal cord.

They compared their data on the Haast’s eagle to characteristics of modern predator birds and scavenger birds to determine that the bird was a fearsome predator that ate the flightless moa birds and even humans.

The researchers also determined the eagle quickly evolved from a much smaller ancestor, with the body growing much more quickly than the brain. They believe its body grew 10 times bigger during the early to middle Pleistocene period, 700,000 to 1.8 million years ago.

“This work is a great example of how rapidly evolving medical techniques and equipment can be used to solve ancient medical mysteries,” Ashwell said.
[...]
Scientists believe the Haast’s eagle became extinct about 500 years ago, most likely due to habitat destruction and the extinction of its prey species at the hands of early Polynesian settlers. Before the humans colonized New Zealand about 750 years ago, the largest inhabitants were birds like the Haast’s eagle and the moa.

Scofield said the findings are similar to what he found in Maori folk tales. “The science supports Maori mythology of the legendary pouakai or hokioi, a huge bird that could swoop down on people in the mountains and was capable of killing a small child,” he said.

Moral Hazard and Capital Structure,

Tuesday, September 15th, 2009

Arnold Kling tells a tale of moral hazard and capital structure:

Take a company with a given set of investment projects (you can think of my favorite example, fruit trees). Should they be financed with equity or with debt?

Before economists got involved, the thinking was that shareholders could earn a higher return with more leverage (more debt). The thinking went something like this: Suppose that the fruit trees earn a 4 percent return per year, and debt costs 3 percent per year. If you go with 50 percent debt and 50 percent equity, then the equity holders earn (approximately) 5 percent per year. But if you go with 90 percent debt and 10 percent equity, then that leaves the equity holders with (approximately) 13 percent returns.

This thinking was challenged by Merton Miller and Franco Modigliani. They said that the debt-equity mix should not matter! That is because investors can offset the leverage decisions of firms. If the firm is only 50 percent leveraged, and I want 90 percent leverage, I borrow most of the money to buy the stock. If the firm is 90 percent leveraged and I want 50 percent leverage, then I buy a combination of bonds and stock.

In fact, the easiest way to think of the Modigliani-Miller theorem is to assume that a single investor owns both the debt and the equity of the firm. If a firm issues $100 in stock and $100 in debt, and I own all of both, then why would I care if the firm changes to a capital structure of $20 in equity and $180 in debt? Either way, I still own the entire firm. As Miller liked to say, whether you cut a pizza into 6 slices or 8 slices, it’s still the same pizza.

Next, we introduce tax costs and bankruptcy costs. There is a tax advantage to using debt rather than equity, so if nothing else mattered, you go for almost entirely debt financing. However, there are bankruptcy costs — there is a loss of resources when a firm goes bankrupt. To reduce the probability of bankruptcy, you want to have some equity. The optimal capital structure is one where the marginal tax cost of equity is offset by the marginal benefit of the additional reduction in the probability of bankruptcy.

Next, we introduce principal-agent problems. Maybe as an equity-holder I am not sure that management will really pay out dividends — what if they go for salary and perks instead? So I would rather be a debt-holder.

Another agency problem is that management may be risk averse. They would rather have a sure salary than take a reasonable risk on behalf of shareholders. So you do what America’s financial wizards of the 1980′s did — you encourage leveraged buyouts, hostile takeovers, and other means to put pressure on management to maximize shareholder value.

Next, suppose we introduce the moral hazard issue. Suppose that the market gradually learns that the probability of a debtholder losing money in the case of the default of a large financial firm is really low, because the government almost always comes to the rescue.

What this amounts to is a very large subsidy to issuing debt. It should shift the balance in favor of high leverage. The capital structure at large financial firms should tend toward huge amounts of debt piled on relatively little equity.

Now, there is an offset. If you are a large financial firm with the ability to issue subsidized debt, you have a profit machine. Going bankrupt would mean that you lose your machine. So you do make some effort to remain solvent, in order to keep your machine. But basically, to get the most out of the machine, you go for the most leverage.

Observations Concerning the Increase of Mankind, Peopling of Countries, etc.

Tuesday, September 15th, 2009

Benjamin Franklin’s Observations Concerning the Increase of Mankind, Peopling of Countries, etc. was published in 1751 — 47 years before Thomas Malthus’s (in)famous Essay on the Principle of Population, which it influenced:

  1. Tables of the Proportion of Marriages to Births, of Deaths to Births, of Marriages to the Numbers of Inhabitants, etc. form’d on Observations made upon the Bills of Mortality, Christnings, etc. of populous Cities, will not suit Countries; nor will Tables form’d on Observations made on full settled old Countries, as Europe, suit new Countries, as America.
  2. For People increase in Proportion to the Number of Marriages, and that is greater in Proportion to the Ease and Convenience of supporting a Family. When Families can be easily supported, more Persons marry, and earlier in Life.
  3. In Cities, where all Trades, Occupations and Offices are many delay marrying, till they can see how to bear the Charges of a Family; which Charges are greater in Cities, as Luxury Is more common: many five single during Life, and continue Servants to Families, Journeymen to Trades, hence Cities do not by natural Generation supply themselves with Inhabitants; the Deaths are more than the Births.
  4. In Countries full settled, the Case must be nearly the same; all Lands being occupied and improved to the Heighth; those who cannot get Land, must Labour for others that have it; when Labourers are plenty, their Wages Will be low; by low Wages a Family is supported with Difficulty; this Difficulty deters many from Marriage, who therefore long continue Servants and single. Only as the Cities take Supplies of People from the Country, and thereby make a little more Room in the Country; Marriage is a little more incourag’d there, and the Births exceed the Deaths.
  5. Europe is generally full settled with Husbandmen, Manufacturers, etc. and therefore cannot now much increase in People: America is cheifly occupied by Indians, who subsist mostly by Hunting. But as the Hunter, of all Men, requires the greatest Quantity of Land from whence to draw his Subsistence, (the Husbandman subsisting on much less, the Gardner on still less, and the Manufacturer requiring least of all), The Europeans found America as fully settled as it well could be by Hunters; yet these having large Tracks, were easily prevail’d on to part with Portions of Territory to the new Comers, who did not much interfere with the Natives in Hunting, and furnish’d them with many Things they wanted.
  6. Land being thus plenty in America, and so cheap as that a labouring Man, that understands Husbandry, can in a short Time save Money enough to purchase a Piece of new Land sufficient for a Plantation, whereon he may subsist a Family; such are not afraid to marry; for if they even look far enough forward to consider how their Children when grown up are to be provided for, they see that more Land is to be had at Rates equally easy, all Circumstances considered.
  7. Hence Marriages in America are more general, and more generally early, than in Europe. And if it is reckoned there, that there is but one Marriage per Annum among 100 Persons, perhaps we may here reckon two; and if in Europe they have but 4 Births to a Marriage (many of their Marriages being late) we may here reckon 8, of which if one half grow up, and our Marriages are made, reckoning one with another 20 Years of Age, our People must at least be doubled every 20 Years.
  8. But notwithstanding this Increase, so vast is the Territory of North-America, that it will require many Ages to settle fully; and till it is fully settled, Labour will never be cheap here, where no Man continues long a Labourer for others, but gets a Plantation of his own, no Man continues long a Journeyman to a Trade, but goes among those new Settlers, and sets up for himself, etc. Hence Labour is no cheaper now, in Pennsylvania, than it was 30 Years ago, tho’ so many Thousand labouring People have been imported.
  9. The Danger therefore of these Colonies interfering with their Mother Country in Trades that depend on Labour, Manufactures, etc. is too remote to require the Attention of Great-Britain.
  10. But in Proportion to the Increase of the Colonies, a vast Demand is growing for British Manufactures, a glorious Market wholly in the Power of Britain, in which Foreigners cannot interfere, which will increase in a short Time even beyond her Power of supplying, tho’ her whole Trade should be to her Colonies: Therefore Britain should not too much restrain Manufactures in her Colonies. A wise and good Mother will not do it. To distress, is to weaken, and weakening the Children, weakens the whole Family.
  11. Besides if the Manufactures of Britain (by Reason of the American Demands) should rise too high in Price, Foreigners who can sell cheaper will drive her Merchants out of Foreign Markets; Foreign Manufactures will thereby be encouraged and increased, and consequently foreign Nations, perhaps her Rivals in Power, grow more populous and more powerful; while her own Colonies, kept too low, are unable to assist her, or add to her Strength.
  12. ‘Tis an ill-grounded Opinion that by the Labour of Slaves, America may possibly vie in Cheapness of Manufactures with Britain. The Labour of Slaves can never be so cheap here as the Labour of working Men is in Britain. Any one may compute it. Interest of Money is in the Colonies from 6 ‘to 10 per Cent. Slaves one with another cost 30 £. Sterling per Head. Reckon then the Interest of the first Purchase of a Slave, the Insurance or Risque on his Life, his Cloathing and Diet, Expences in his Sickness and Loss of Time, Loss by his Neglect of Business (Neglect is natural to the Man who is not to be benefited by his own Care or Diligence), Expence of a Driver to keep him at Work, and his Pilfering from Time to Time, almost every Slave being by Nature a Thief, and compare the whole Amount with the Wages of a Manufacturer of Iron or Wool in England, you will see that Labour is much cheaper there than it ever can be by Negroes here. Why then will Americans purchase Slaves? Because Slaves may be kept as long as a Man pleases, or has Occasion for their Labour; while hired Men are continually leaving their Master (often in the midst of his Business,) and setting up for themselves. §. 8.
  13. As the Increase of People depends on the Encourage. ment of Marriages, the following Things must diminish a Nation, viz.

    1. The being conquered; for the Conquerors will engross as many Offices, and exact as much Tribute or Profit on the Labour of the conquered, as will maintain them in their new Establishment, and this diminishing the Subsistence of the Natives discourages their Marriages, & so gradually diminishes them, while the Foreigners increase.
    2. Loss of Territory. Thus the Britons being driven into Wales, and crowded together in a barren Country insufficient to support such great Numbers, diminished ’till the People bore a Proportion to the Produce, while the Saxons increas’d on their abandoned Lands; ’till the Island became full of English. And were the English now driven into Wales by some foreign Nation, there would in a few Years be no more Englishmen in Britain, than there are now People in Wales.
    3. Loss of Trade. Manufactures exported, draw Subsistence from Foreign Countries for Numbers; who are thereby enabled to marry and raise Families. If the Nation be deprived of any Branch of Trade, and no new Employment is found for the People occupy’d in that Branch, it will also be soon deprived of so many People.
    4. Loss of Food. Suppose a Nation has a Fishery, Which not only employs great Numbers, but makes the Food and Subsistence of the People cheaper: If another Nation becomes Master of the Seas, and prevents the Fishery, the People will diminish in Proportion as the Loss of Employ, and Dearness of Provision, makes it more difficult to subsist a Family.
    5. Bad Government and insecure Property. People not only leave such a Country, and settling Abroad incorporate with other Nations, lose their native Language, and become Foreigners; but the Industry of those that remain being discourag’d, the Quantity of Subsistence in the Country is lessen’d, and the Support of a Family becomes more difficult. So heavy Taxes tend to diminish a People.
    6. The Introduction Of Slaves. The Negroes brought into the English Sugar Islands, have greatly diminish’d the Whites there; the Poor are by this Means depriv’d of Employment, while a few Families acquire vast Estates; which they spend on Foreign Luxuries, and educating their Children in the Habit of those Luxuries; tile same Income is needed for the Support of one that might have maintain’d 100. The Whites who have Slaves, not labouring, are enfeebled, and therefore not so generally prolific; the Slaves being work’d too hard, and ill fed, their Constitutions are broken, and the Deaths among them are more than the Births; so that a continual Supply is needed from Africa. The Northern Colonies having few Slaves increase in Whites. Slaves also pejorate the Families that use them; the white Children become proud, disgusted with Labour, and being educated in Idleness, are rendered unfit to get a Living by Industry.
  14. Hence the Prince that acquires new Territory, if he finds it vacant, or removes the Natives to give his own People Room; the Legislator that makes effectual Laws for promoting of Trade, increasing Employment, improving Land by more or better Tillage; providing more Food by Fisheries; securing Property, etc. and the Man that invents new Trades, Arts or Manufactures, or new Improvements in Husbandry, may be properly called Fathers of their Nation, as they are the Cause of the Generation of Multitudes, by the Encouragement they afford to Marriage.
  15. As to Privileges granted to the married, (such as the Jus trium Liberorum among the Romans), they hasten the filling of a Country that has been thinned by War or Pestilence, or that has otherwise vacant Territory; but cannot increase a People beyond the Means provided for their Subsistence.
  16. Foreign Luxuries & needless Manufactures imported and used in a Nation, do, by the same Reasoning, increase the People of the Nation that furnishes them, and diminish the People of the Nation that uses them. Laws therefore that prevent such Importations, and on the contrary promote the Exportation of Manufactures to be consumed in Foreign Countries, may be called (with Respect to the People that make them) generative Laws, as by increasing Subsistence they encourage Marriage. Such Laws likewise strengthen a Country, doubly, by increasing its own People and diminishing its Neighbours.
  17. Some European Nations prudently refuse to consume the Manufactures of East-India: They should likewise forbid them to their Colonies; for the Gain to the Merchant, is not to be compar’d with the Loss by this Means of People to the Nation.
  18. Home Luxury in the Great, increases the Nation’s Manufacturers employ’d by it, who are many, and only tends to diminish the Families that indulge in it, who are few. The greater the common fashionable Expence of any Rank of People, the more cautious they are of Marriage. Therefore Luxury should never be suffer’d to become common.
  19. The great Increase of Offspring in particular Families, is not always owing to greater Fecundity of Nature, but sometimes to Examples of Industry in the Heads, and industrious Education; by which the Children are enabled to provide better for themselves, and their marrying early, is encouraged from the Prospect of good Subsistence.
  20. If there be a Sect therefore, in our Nation, that regard Frugality and Industry as religious Duties, and educate their Children therein, more than others commonly do; such Sect must consequently increase more by natural Generation, than any other Sect in Britain.
  21. The Importation of Foreigners into a Country that has as many Inhabitants as the present Employments and Provisions for Subsistence will bear; will be in the End no Increase of People; unless the New Comers have more Industry mid Frugality than the Natives, and then they will provide more Subsistence, and increase in the Country; but they will gradually eat the Natives out.-Nor is it necessary to bring it, Foreigners to fill up any occasional Vacancy in a Country; for such Vacancy (if the Laws are good, § 14, 16) will soon be filled by natural Generation. Who can now find the Vacancy made in Sweden, France or other Warlike Nations, by the plague of Heroism 40 Years ago; in France, by the Expulsion of the Protestants; in England, by the Settlement of her Colonies; or in Guinea, by 100 Years Exportation of Slaves, that has blacken’d half America? The thinness of Inhabitants in Spain, is owing to National Pride and Idleness, and other Causes, rather than to the Expulsion of the Moors, or to the making of new Settlements.
  22. There is in short, no Bound to the prolific Nature of Plants or Animals, but what is made by their crowding and interfering with each others Means of Subsistence. Was the Face of the Earth vacant of other Plants, it might be gradually sowed and overspread with one Kind only; as, for Instance, with Fennel; and were it empty of other Inhabitants, it might in a few Ages be replenish’d from one Nation only; as, for Instance, with Englishmen. Thus there are suppos’d to be now upwards of One Million English Souls in North-America, (tho’ ’tis thought scarce 80,000 have been brought over Sea) and yet perhaps there is not one the fewer in Britain, but rather many more, on Account of the Employment the Colonies afford to Manufacturers at Home. This Million doubling, suppose but once in 25 Years, will in another Century be more than the People of England, and the greatest Number of Englishmen will be on this Side the Water.

    What an Accession of Power to the British Empire by Sea as well as Land! What Increase of Trade and Navigation! What Numbers of Ships and Seamen! We have been here but little more than 100 Years, and yet the Force of our Privateers in the late War, United, was greater, both in Men and Guns, than that of the whole British Navy in Queen Elizabeth’s Time. How important an Affair then to Britain, is the present Treaty for settling the Bounds between her Colonies and the French, and how careful should she be to secure Room enough, since on the Room depends so much the Increase of her People?

  23. In fine, A Nation well regulated is like a Polypus; take away a Limb, its Place is soon supply’d; cut it in two, and each deficient Part shall speedily grow out of the Part remaining. Thus if you have Room and Subsistence enough, as you may by dividing, make ten Polypes out of one, you may of one make ten Nations, equally populous and powerful; rather, increase a Nation ten fold in Numbers and Strength.

    And since Detachments of English from Britain sent to America, will have their Places at Home so soon supply’d and increase so largely here; why should the Palatine Boors be suffered to swarm into our Settlements, and by herding together establish their Language and Manners to the Exclusion f ours? Why should Pennsylvania, founded by the English, become a Colony of Aliens, who will shortly be so numerous as to Germanize us instead of our Anglifying them, and will never adopt our Language or Customs, any more than they can acquire our Complexion.

  24. Which leads me to add one Remark: That the Number of purely white People in the World is proportionably very small. All Africa is black or tawny. Asia chiefly tawny. America (exclusive of the new Comers) wholly so. And in Europe, the Spaniards, Italians, French, Russians and Swedes, are generally of what we call a swarthy Complexion; as are the Germans also, the Saxons only excepted, who with the English, make the principal Body of White People on the Face of the Earth. I could wish their Numbers were increased. And while we are, as I may call it, Scouring our Planet, by clearing America of Woods, and so making this Side of our Globe reflect a brighter Light to the Eyes of Inhabitants in Mars or Venus, why should we in the Sight of Superior Beings, darken its People? why increase the Sons of Africa, by Planting them in America, where we have so fair an Opportunity, by excluding all Blacks and Tawneys, of increasing the lovely White and Red? But perhaps I am partial to the Compexion of my Country, for such Kind of Partiality is natural to Mankind.

I was familiar with Franklin’s prediction that the Colonies would contain more Englishman than England, but I only found and read the essay when Steve Sailer called it “the most prodigious intellectual effort of early American letters” and remarked that it is “almost unknown today.”

Similarly unknown today is Richard Cantillon’s Essay on the Nature of Trade in General, from 1730 (or so). Franklin echoes many of Cantillon’s points, most notably in §. 16.

How Democracies Perish

Tuesday, September 15th, 2009

Lance Fairchok discovered Jean Francois Revel — and thus the rarest of works — quite by accident:

While researching anti-American organizations that support terrorist groups, I came across a thin volume entitled simply, Anti-Americanism. Written by a respected French intellectual, it is the rarest of works, examining and condemning the reflexive and unjustified anti-Americanism found in the European and particularly the French press. It is a clear and biting indictment of the unreason of the popular press and of the totalitarian left. Revel’s regard for the US was unclouded by naive romanticism. He judged us fairly, took stock of our strengths and weaknesses and found us admirable.

While visiting a used bookstore a few weeks later, he found another Revel book, How Democracies Perish, which he cites twice:

  • Exaggerated self-criticism would be a harmless luxury of civilization if there were no enemy at the gate condemning democracy’s very existence. But it becomes dangerous when it portrays its mortal enemy as always being in the right. Extravagant criticism is a good propaganda device in internal politics. But if it is repeated often enough, it is finally believed. And where will the citizens of democratic societies find reasons to resist the enemy outside if they are persuaded from childhood that their civilization is merely an accumulation of failures and a monstrous imposture?
  • But democracy can defend itself only very feebly; its internal enemy has an easy time of it because he exploits the right to disagree that is inherent in democracy. His aim of destroying democracy itself, of actively seeking an absolute monopoly of power, is shrewdly hidden behind the citizen’s right to oppose and criticize the system. Paradoxically, democracy offers those seeking to abolish it a unique opportunity to work against it legally. They can even receive almost open support from the external enemy without its being seen as a truly serious violation of the social contract. The frontier is vague, the transition easy between the status of a loyal opponent wielding a privilege built into democratic institutions and that of an adversary subverting those institutions. To totalitarianism, an opponent is by definition subversive; democracy treats subversives as mere opponents for fear of betraying it principles.

(Hat tip à mon père.)

Shocking Views on Health Policy

Monday, September 14th, 2009

Arnold Kling shares some shocking views on health policy from Richard Cooper:

Orszag has argued that if Medicare spending could be as low in Newark as it is at Mayo, the nation could save billions. But this theory doesn’t hold up in practice. Consider: One-fourth of the folks in Newark live in poverty, compared with less than 10 percent of those in Rochester. And national surveys show that poor people consume more health-care resources — 50 to 75 percent more than average. They are sicker and they stay sicker, despite the best efforts of physicians and hospitals. Mayo is a fine institution, but it isn’t more cost-effective than other hospitals in its home region, nor are its operations in Jacksonville, Fla., and Phoenix more cost-efficient than other hospitals in those cities. So why would it be more cost-effective in Newark?

Cooper has more to say:

Regional variation is a product of regional differences in wealth, overlaid with differences in poverty. It’s not generally appreciated that health care expenditures for people in the lowest 15% of income are 50% to 100% greater than for people of average income. There’s also a difference at the high end. The wealthiest 15% also consume more, but only about 20% more. So there’s greater utilization at both ends of the income spectrum, but for different reasons and with different outcomes.

More spending at the high end improves outcomes, not simply for a specific condition but across the board, because the care consists of a broader spectrum of beneficial services. More yields more. But among the low-income patients, outcomes are poor despite the added spending. In fact, the added spending is because of poor outcomes — more readmissions, more care for disease that’s out of control.
[...]
The Dartmouth folks say that Mayo is more “efficient” in resources used per patient or in number of doctors devoted per unit of patient care than in LA, Philadelphia, Miami, Chicago, and New York City.

But the so-called “inefficient” hospitals are all in dense urban centers, while “efficient” hospitals are all in smaller cities, often college towns liked Madison, Wisconsin or Columbia, Missouri, or in places like Rochester, Minnesota, where Mayo is located. Rochester is 90% Caucasian with low poverty. But in fact, Mayo is the most resource intensive center in the upper Midwest. Among peer institutions in similar socio-demographic environments, Mayo actually uses more resources. But you can’t compare Mayo to Los Angeles, where only 30% of the population is non-Hispanic white and where you have tremendous pockets of poverty.

Why can’t children walk to school?

Monday, September 14th, 2009

Why can’t children walk to school?

In 1969, 41 percent of children either walked or biked to school; by 2001, only 13 percent still did, according to data from the National Household Travel Survey. In many low-income neighborhoods, children have no choice but to walk. During the same period, children either being driven or driving themselves to school rose to 55 percent from 20 percent. Experts say the transition has not only contributed to the rise in pollution, traffic congestion and childhood obesity, but has also hampered children’s ability to navigate the world.

In a study of San Francisco Bay Area parents who drove children ages 10 to 14 to school, published this summer in the Journal of the American Planning Association, half would not allow them to walk without supervision, and 30 percent said fear of strangers governed their decision.

In recent years, parents like Katie have begun to push back. They often encounter disapproval by other parents, scoldings by school administrators, even visits from local constabularies.

“I don’t feel you can be a parent and not feel nervous,” said Lenore Skenazy, whose recent book, “Free-Range Kids: Giving Our Children the Freedom We Had Without Going Nuts with Worry,” looks at parental fears and statistical realities. “But we don’t do them a service by going to the worst-case scenario in your mind and acting accordingly. Organizing your life around the images of Etan Patz and Jaycee Dugard negates the joy you had walking to school as a kid or even the sense that you could take care of yourself.”

Denise Schipani, a writer in Huntington Station, N.Y., recently added a post on her blog, Confessions of a Mean Mommy, entitled “The Bus Stop Conundrum.” Ms. Schipani herself grew up in an era when “we had a life outside the house that had nothing to do with our parents,” she said. “Kids used to do more things on their own because they could. No one was saying, ‘not until you’re 10 or 12.’ But on our street, people drive fast and my kids expect me to wait with them for the school bus.” So do other mothers. “How long do I have to do this? What are the rules?”

The federally funded Safe Routes to School program has been working with communities to address problems that impede children from walking or biking to school. Particularly since last summer, when gas prices rose and districts began cutting budgets, some districts have been turning to “the walking school bus,” where parent volunteers walk groups of children to school.

But communal will around this issue has not yet arrived in many places. In Columbus, Miss., Lori Pierce would like her daughters, 6 and 8, to walk the mile to school by the end of the year. “They want to walk,” she said. “They have scooters.” But she and the girls face obstacles. Mrs. Pierce must teach them the rules of a busy street, have officials install some sidewalks and urge the school to hire a crossing guard.

And Mrs. Pierce faces another obstacle to becoming a free-range mother: public opinion.

Last spring, her son, 10, announced he wanted to walk to soccer practice rather than be driven, a distance of about a mile. Several people who saw the boy walking alone called 911. A police officer stopped him, drove him the rest of the way and then reprimanded Mrs. Pierce. According to local news reports, the officer told Mrs. Pierce that if anything untoward had happened to the boy, she could have been charged with child endangerment. Many felt the officer acted appropriately and that Mrs. Pierce had put her child at risk.

Critics say fears that children will be abducted by strangers are at a level unjustified by reality. About 115 children are kidnapped by strangers each year, according to federal statistics; 250,000 are injured in auto accidents.

Ms. Skenazy, who prompted an uproar in 2008 when she wrote a column about allowing her 9-year-old son to take a New York City subway and bus alone, said that the alarm parents feel has been stoked by sensation-seeking news outlets and crime shows like “Law & Order: Special Victims Unit.”

“On TV, most criminals are strangers,” she said. “That sinks into your view of the world and you think all strangers are to be distrusted.”

Schools are skittish about unsupervised young walkers. Lisa Reid, who lives in a suburb of Vancouver, British Columbia, had signed a permission form, but when her first-grader proudly told his teacher he was walking home himself last spring, a distance of six houses, the teacher was incredulous. She took him to the office and called Mrs. Reid, who didn’t hear the phone.

That was because Mrs. Reid was pacing at the end of the driveway, waiting for her son, her worries climbing exponentially as the moments ticked by.

Mrs. Reid used to teach in a Vancouver school where many students were refugees. “Those kids all walked home,” she said. “They came from countries where they walked through terrible, horrible things, and they thought it was great to be safe here on our streets.”

Jonathan Zimmerman, a New York University professor who writes about the history of American education, said that schools themselves should not be blamed for what some might consider hyper-vigilance. “The public school is the most grass-roots institution we have,” he said. “They’re responding to very real demands. This is clearly something that has engaged and agitated the public.”

Not only do institutions feel threatened when individuals wander off the range; so do other parents.

Recently, Amy Utzinger, a mother of four in Tucson, Ariz., let her daughter, 7, walk down the block to play with a friend. Five houses. Same side of the street.

Afterward, the friend’s mother drove Mrs. Utzinger’s daughter home. “She said, ‘I just drove her back, just in case … you know,’ ” recalled Mrs. Utzinger. “What was I supposed to say? How can you argue against ‘just in case’?”

Antioxidants and Cancer: Backwards?

Monday, September 14th, 2009

Do we have the relationship between antioxidants and cancer backwards?

Readers may remember a study from earlier this year that suggested that taking antioxidants canceled out some of the benefits of exercise. It seems that the reactive oxygen species themselves, which everyone’s been assuming have to be fought, are actually being used to signal the body’s metabolic changes.

Now there’s another disturbing paper on a possible unintended effect of antioxidant therapy. Joan Brugge and her group at Harvard published last month on what happens to cells when they’re detached from their normal environment. What’s supposed to happen, everyone thought, is apoptosis, programmed cell death. Apoptosis, in fact, is supposed to be triggered most of the time when a cell detects that something has gone seriously wrong with its normal processes, and being detached from its normal signaling environment (and its normal blood supply) definitely qualifies. But cancer cells manage to dodge that difficulty, and since it’s known that they also get around other apoptosis signals, it made sense that this was happening here, too.

But there have been some recent reports that cast doubt on apoptosis being the only route for detached cell death. This latest study confirms that, but goes on to a surprise. When this team blocked apoptotic processes, detached cells died anyway. A closer look suggested that the reason was, basically, starvation. The cells were deprived of nutrients after being dislocated, ran out of glucose, and that was that. This process could be stopped, though, if a known oncogene involved in glucose uptake (ERBB2) was activated, which suggests that one way a cancer cells survive their travels is by keeping their fuel supply going.

So far, so good – this all fits in well with what we already know about tumor cells. But this study found that there was another way to keep detached cells from dying: give them antioxidants. (They used either N-acetylcysteine or a water-soluble Vitamin E derivative). It appears that oxidative stress is one thing that’s helping to kill off wandering cells. On top of this effect, reactive oxygen species also seem to be inhibiting another possible energy source, fatty acid oxidation. Take away the reactive oxygen species, and the cells are suddenly under less pressure and have access to a new food source. (Here’s a commentary in Nature that goes over all this in more detail, and here’s one from The Scientist.)

They went on to use some good fluorescence microscopy techniques to show that these differences in reactive oxygen species are found in tumor cell cultures. There are notable metabolic differences between the outer cells of a cultured tumor growth and its inner cells (the ones that can’t get so much glucose), but that difference can be smoothed out by. . .antioxidants. The normal process is for the central cells in such growths to eventually die off (luminal clearance), but antioxidant treatment kept this from happening. Even more alarmingly, they showed that tumor cells expressing various oncogenes colonized an in vitro cell growth matrix much more effectively in the presence of antioxidants as well.

The People’s Republic of Google

Monday, September 14th, 2009

Unlike Cringely, I would not call it The People’s Republic of Google, based on this description — but it’s definitely not a normal business either:

Google isn’t organized like any tech company I’ve ever worked in, that’s for sure. Peer review seems to be at the heart of nearly everything. Yes, there are executives doing whatever it is that executives do up in the Eric/Larry/Sergeysphere, but down where the bits meet the bus most decisions seem to be reached through a combination of peer review-driven concensus and literal popularity polls.

The heart of Google is code and all code there is peer reviewed TO DEATH. The result is absolutely the cleanest code in the digital world, forced into that condition by what can be a torturous process of line-by-comment-by punctuation mark analysis sometimes over-driven by people who take their work WAY too seriously. You know the type. Peer review wars have apparently been known to break out at Google, though rarely. Usually the pedants are accommodated and, in fact, they for the most part win. The code is clean as a result, but the process is s-l-o-w, or so I’ve been told.

And the code had better be clean, because at Google developers outnumber testers by 50-to-1.

But peer review at Google goes way beyond looking at the code. Hiring requires peer review. Promotion requires peer review. Presumably even firing requires peer review, though I didn’t have anyone actually tell me that. All the technical workers at Google are involved in peer review activities a LOT of the time — up to 20 percent, in fact.

Which brings us to the vaunted 20 percent time Google engineers are supposed to get to work on anything they like. Most of them apparently use that time for corporate housekeeping — for doing all that peer reviewing. It makes sense: if you want to appear productive in your main job yet are still required to do all this work that would normally be handled by managers, when else can you do it but during time you don’t have to account for?

This may be part of the reason that the Google 20 percent time hasn’t spawned as many new products as I expected it would.

This is where it gets odd:

At Google I am told developers bid for what they want to do with their time. If there’s a big job to be done people commit to parts of it. And the parts nobody commits to do? They don’t get done. Really. So when we wonder exactly how a JotSpot, which I really liked, turns into a Google Sites, which I really don’t like, that morphology apparently comes from people changing what they want to change.

There is no marketing input.

Effectively, there is no marketing.

I am not making this up.

How Team of Geeks Cracked Spy Trade

Monday, September 14th, 2009

It helps to have an old law-school buddy like Peter Thiel, Alex Karp found out, when you decide to disrupt the spy trade with your new high-tech venture:

“We were very naive. We just thought this was a cool idea,” says Palantir’s 41-year-old chief executive Alexander Karp, whose usual dress is a track-suit jacket, blue jeans, and red leather sneakers. “I underestimated how difficult it would be.”
[...]
Palantir’s roots date back to 2000, when Mr. Karp returned to the U.S. after living for years in Frankfurt, where he earned his doctorate in German social philosophy and discovered a talent for investing. He reconnected with a buddy from Stanford Law School, Peter Thiel, the billionaire founder of online payment company PayPal.

In 2003, Mr. Thiel pitched an idea to Mr. Karp: Could they build software that would uncover terror networks using the approach PayPal had devised to fight Russian cybercriminals?

PayPal’s software could make connections between fraudulent payments that on the surface seemed unrelated. By following such leads, PayPal was able to identify suspect customers and uncover cybercrime networks. The company saw a tenfold decrease in fraud losses after it launched the software, while many competitors struggled to beat back cheaters.

Mr. Thiel wanted to design software to tackle terrorism because at the time, he says, the government’s response to issues like airport security was increasingly “nightmarish.” The two launched Palantir in 2004 with three other investors, but they attracted little interest from venture-capital firms. The company’s $30 million start-up costs were largely bankrolled by Mr. Thiel and his own venture-capital fund.

A born progressive

Sunday, September 13th, 2009

A former-progressive-turned-conservative was telling his four-year-old that many people in Africa are very poor, even starving:

Boy: I would give the people in Africa money so they wouldn’t starve.
Me: Ok. We can give them your allowance.
Boy: Nooooooo!!!!!!
Me: Then how are you going to give them money?
Boy: I would give them other people’s money!

Progressives: born, not made.